Macquarie Capital Securities (Japan) Limited has lowered their recommendation rating on whether or not to invest in Nintendo’s stock to Neutral, after raising it to Outperform earlier in the year.
Their reasoning has been shared in a new report that has been broken down on Seeking Alpha, in which the firm has shared their expectation that the Nintendo NX reveal is “coming next week.”
There main concern is that it will be priced between $300 – $350, with worry surrounding whether this will be a threat to the console’s chances at becoming a mass market product. Macquarie even go as far as to suggest that the price could result in a “major” disappointment for high-volume sales.
It isn’t only Nintendo NX that they are worried about, either. With Super Mario Run initially exclusive to iOS devices and not seeing release in China, they argue that it will miss 60 percent of the potential market – despite Nintendo’s assurances that it will arrive on Android soon after.
The key parts of Macquarie’s report, are:
- Running against a general recent bullish tide, Macquarie has downgraded Nintendo (OTCPK:NTDOY) to Neutral, from its previous Outperform rating.
- A long-in-the-works revamp to the company’s consoles — the NX, with reveal coming next week — is liable to come at a price that will result in a “major” disappointment for volume sales, the firm says.
- Speculation is putting the price of the new console between $300 and $350, in line with competing consoles, vs. the Wii’s former discount to rival boxes from Sony and Microsoft.
- The company’s move into mobile gaming, Super Mario Run, has a missed opportunity as well, Macquarie says: Being only iOS and ex-China, it’s missing 60% of the market.
- The firm cut its price target on Nintendo to ¥25,900 from a previous ¥27,300, implying some fractional downside from today’s closing price of ¥26,075.